Gold buyers make a stand but they’ll need a cooperative Fed

Gold yesterday fell below last week’s low and looked like it could be in store for a deeper correction but buyers reappeared today, lifting it $21 to $2306.

Naturally, the focus is on the Federal Reserve interest rate decision later. There is angst throughout markets that they could be more-hawkish and potentially put a rate hike on the table.

I think that’s a low-probability outcome and Powell has a habit of being reassuringly dovish. If that continues, gold could rebound further. If so, the $2340 high from yesterday followed by last week’s high of $2352 are levels to watch. A break above those would probably also require something like a soft non-farm payrolls report on Friday but would be a strong signal for the bulls.

Beyond that, eyes remain on China for hints of central bank and retail buying. I was also surprised to see buying so strong from Turkey on this chart but it makes sense given the currency instability.

This article was written by Adam Button at www.forexlive.com.